Bridgestone expects difficult year, after mixed 2003 results

By Patrick Raleigh, ERJ On-line news editor

Tokyo-Bridgestone Corp. expects “challenging” trading conditions during 2004, due to rising raw material prices and the weakness of the dollar, despite good tyre market prospects in Europe and the US.

The negative factors “could offset the positive contribution from generally strong economic trends,” to leave operating income around 33-percent lower than in 2003, the group said 20 Feb.

For 2003, Bridgestone posted an operating income basically unchanged at $1700 million, on 2003 sales of $21 500 million, 2 percent higher than in the previous year. The results reflected a year of differing fortunes in each of main global regions, including strong gains in Europe.

At Bridgestone's tyre business, which represented 80 percent of its 2003 global sales, operating income fell 4 percent to around $1400 million, due mainly to rising raw material prices and pension-related costs.

The earnings dip came despite “successful” product introductions and marketing programmes worldwide, which helped to lift sales by 2 percent, Bridgestone said.

Sales of non-tyre products rose 4 percent to $4500 million, while operating income increased 22 percent to $320 million. Bridgestone linked the gains to solid exports of industrial products and chemical products from Japan, and higher sales of automotive components.

Group-wide, sales in Japan rose 2 percent to $9800 million but operating income fell 5 percent to $1200 million on rising raw materials and pension-related costs.

Unit sales were solid in original equipment tyres and significantly increased in exports to Europe, the Middle East, Asia, and Australia. These gains offset lower unit sales of replacement tyres in Japan on weak demand and supply issues following the Tochigi Plant fire, Bridgestone reported.

In Europe, by contrast, group sales rose 20 percent to $2700 million, while operating income climbed 87 percent to $140 million. The group linked the gains to increased sales of high-value products, restructuring efforts in 2002, and a strengthening of the euro against the yen.

Unit sales of passenger car and light truck tyres increased in Europe, both in the OE and replacement markets. Replacement tyre sales benefited from an expansion of the Bridgestone-affiliated retailer network. Truck and bus tyre sales also grew, due to an increase in business with large fleet operators, the group said.

In the Americas, yen-denominated operating income rose 5 percent to $180 million, on sales 1 percent lower at $9100 million. Price increases, a better product mix, and strong automotive component sales offset higher raw material and pension costs, Bridgestone said.

Unit tyres sales were strong in most of the main market segments, including solid growth in demand for Bridgestone-brand replacement tyres. Sale of original equipment tyres, however, declined, the group noted.